The Role of the Financial Regulatory Authority in Insurance Activities
The insurance sector is considered one of the most significant sectors supporting the national economy, not only as a mechanism for risk management and the protection of individuals and institutions against potential losses, but also as a principal contributor to financing economic and social development. Insurance provides a financial protection umbrella that enhances the stability of economic activities and enables investors to expand their projects without fear of unforeseen risks, thereby positively affecting growth and productivity rates. The sector also contributes to mobilizing long-term savings and directing them toward strategic investments that support the Country’s plans for infrastructure development, sustainable development, and the stimulation of productive and service activities.
On the other hand, insurance inclusion constitutes one of the fundamental pillars for expanding the social impact of the insurance sector. In this regard through the Financial Regulatory Authority (FRA), Egypt seeks to ensure access to insurance services for all segments of society, particularly those least able to obtain traditional protection instruments.
The law has also introduced new tools related to digitalization and financial technology, enabling Insurance Companies to issue and distribute policies electronically and to provide innovative services that contribute to reducing administrative costs and expanding the customer base. The Financial Regulatory Authority monitors the implementation of these legislations through advanced supervisory mechanisms that ensure a balance between customer protection and encouraging corporate innovation. Among the most prominent measures are obligating companies to establish call centers to serve digital policyholders and adopting advanced digital verification systems to ensure the accuracy of customer data and protect the market against money laundering and terrorist financing risks.
Various types of the Insurance Activities
The insurance sector in Egypt includes a number of vital activities, are the following:
- Personal insurance and capital formation operations.
- Property and liability insurance.
- Specialized medical insurance, both long-term and short-term, and the related services and activities.
Microinsurance
FRA, in cooperation with Japan International Cooperation Agency (JICA), conducted a research survey on the demand for microinsurance products in certain governorates of the Arab Republic of Egypt, with the aim of identifying the needs of the target segments of this relatively new insurance branch in the Egyptian market. This survey is considered one of the very few conducted to identify the needs of low-income clients in the Arab Republic of Egypt.
The FRA’s Role in Supervising Insurance Activities
To engage in any insurance-related activity, the law requires registration with FRA. Such activities include the following:
1- Insurance and Reinsurance Companies:
Direct Insurance Companies:
These companies are responsible for issuing insurance policies (insurance coverages) in the fields of property insurance, liability insurance, personal insurance, and capital formation operations, in addition to settling the compensations due for such activities upon the occurrence of the insured risk.
Reinsurance Companies:
These companies specialize in accepting portions of risks from direct insurance companies in return for a commission.
2- Cooperative Insurance Associations:
A cooperative insurance association is one that is established within the framework of the general provisions governing cooperatives and provides its members with an insurance system among themselves.
3- Private Insurance Funds:
These are systems established within an authority, company, syndicate, or association of individuals linked by a single profession, occupation, or social relationship, with the purpose of granting their members insurance rights in the form of financial benefits agreed upon among them.
4- Government Insurance Funds:
These are funds that undertake insurance operations against risks that insurance companies usually do not accept, or which the government deems appropriate to conduct itself.
5- Insurance Pools:
The law permits insurance and reinsurance companies to establish insurance pools among themselves to manage a specific branch of insurance or a particular insurance operation.
The Main Functions of FRA in Insurance Fields and Activities
Protecting the rights of insurance policyholders, beneficiaries, and third parties.
- Ensuring the achievement of the economic and social objectives of insurance activity and safeguarding national savings.
- Ensuring the soundness of the financial positions of insurance market entities, coordination among them, and preventing conflicts of interest.
- Contributing to the development of insurance awareness in the country.
- Strengthening and developing the insurance market.
- Advancing insurance professions and effectively contributing to the provision of expertise.
Protection of Policyholders’ Rights
The Unified Insurance Law promulgated by Law No. (155) of 2024 devoted Chapter (4) to regulating the Policyholders’ Protection Fund. The establishment of the Fund was implemented pursuant to Article (198) of Law No. 155 of 2024, which stipulates the following:
“The Policyholders’ and Beneficiaries’ Guarantee Fund is a legal person governed by private law, having an independent budget and subject to the supervision of the Authority, with its headquarters in the City of Cairo. It aims to compensate policyholders and beneficiaries as a result of the company’s inability to fulfill its obligations. The Prime Minister may, after obtaining the opinion of the Authority, amend the Fund’s statute issued prior to the enforcement of this Law.”
Prime Ministerial Decree No. 2734 of 2018 was issued on 25 December 2018 and was subsequently amended by several Prime Ministerial decrees, the latest of which is Decree No. (597) of 2025, issuing the statute of the Policyholders’ and Beneficiaries’ Guarantee Fund at insurance companies.
The statute of the Policyholders’ Protection Fund must, in particular, include the following:
- The objectives of the Fund, the means of achieving them, and the organization of its relationship with the Authority.
- Membership subscription, its conditions, and the value of annual subscriptions payable by member companies.
- The operational system of the Fund and the formation of its Board of Directors.
- The scope of guarantee and the maximum compensation payable by the Fund.
- The financial resources of the Fund and the rules governing their expenditure.
- The auditing of the Fund’s accounts.
Laws Governing Insurance Activities in Egypt:
Governance and Compliance
FRA works to entrench the principles of transparency, disclosure, and sound governance through:
- Obligating companies to periodically disclose their financial data and material information.
- Monitoring the extent to which institutions comply with professional rules and standards.
- Combating fraud, manipulation, money laundering, and terrorist financing within the insurance sector.
- Enhancing a secure investment environment that protects the rights of policyholders.
Initiation of The Criminal Proceedings
Within the framework of the Authority’s supervisory role over companies operating in the insurance sector and subject to its supervision—and in addition to its right to impose administrative sanctions—the Unified Insurance Law promulgated by Law No. 155 of 2024 provides that the provisions of Article No. 16 of Law No. 10 of 2009 regulating supervision over non-banking financial markets and instruments shall apply.
Article 16 of Law No. 10 of 2009 stipulates that no investigation procedures may be taken, nor may criminal proceedings be instituted in respect of the crimes stipulated in the laws referred to in Article 3 thereof, except upon a written request from the Chairman of the Authority. The Chairman of the Authority may reconcile in respect of such crimes at any stage of the proceedings in consideration of the payment of an amount to the Authority not less than twice the minimum fine prescribed. Such reconciliation results in the extinction of the criminal action in respect of the crime subject to reconciliation, and the Public Prosecution shall order the suspension of the execution of the penalty if reconciliation occurs during its execution, even after the judgment has become final.